Front Page Titles (by Subject) [SECT. III.]—: TAXES UPON THE RENT OF HOUSES. - Lectures on Political Economy, vol. 2
The Online Library of Liberty
A project of Liberty Fund, Inc.
Search this Title:
[SECT. III.]—: TAXES UPON THE RENT OF HOUSES. - Dugald Stewart, Lectures on Political Economy, vol. 2 
Lectures on Political Economy. Now first published. Vol. II. To which is Prefixed, Part Third of the Outlines of Moral Philosophy, edited by Sir William Hamilton (Edinburgh, Thomas Constable, 1856).
About Liberty Fund:
The text is in the public domain.
Fair use statement:
TAXES UPON THE RENT OF HOUSES.
Another species of rent yet remains to be considered as an object of taxation; I mean the rent of houses. This differs from a land-rent in one essential circumstauce: that the former is drawn from an unproductive, the latter from a productive subject; and, of consequence, the rent which is paid for the use of a house, must be derived from some other source of revenue. In so far, therefore, as a tax upon house-rent falls on the inhabitants, it is one of those taxes which must fall indiscriminately upon all the three sources of revenue formerly mentioned, and is properly to be classed with the taxes imposed on consumable commodities.
In treating of these, it will appear afterwards, that the general principle which has served to recommend them to modern statesmen is, that they afford the most practicable mode of taxing revenue, which it is scarcely possible to tax proportionably by any direct imposition. The revenue, it is supposed, will in most cases be nearly in proportion to the expense; and the expense is measured by the consumable commodities on which it is laid out. This general principle applies with peculiar force to the subject now under consideration, as there is scarcely any one article of consumption which may be assumed with so great confidence, as a scale for estimating the whole expenditure of an individual. A proportional tax on it might (in Mr. Smith’s opinion) produce a more considerable revenue than has been hitherto drawn from it in any part of Europe.*
Ground-rents (although they have hitherto not been subjected in any country of Europe to a separate tax) are a still more proper object of taxation than the rent of houses. Such a tax would fall altogether upon the owner of the ground-rent, (who may always be presumed to be actuated by the spirit of monopoly,) and would have no effect to raise the rent of houses, the inhabitants of which, even although they should advance the tax in the first instance, would indemnify themselves by the fall in the ground-rents which the tax would necessarily occasion.
Another consideration strongly recommends this species of revenue as a fit object of taxation, that it is enjoyed without any attention exerted on the part of the owner, and depends almost entirely on local causes connected with the general administration of the country. In this respect, it is distinguished from the ordinary rent of land, which depends, partly at least, on the good or bad management of the landlord.
[* ] [Wealth of Nations, Book V. chap. ii.; Vol. III. p. 285, tenth edition.]